Recently, award-winning mobile game developer, PlayStudios and Acies acquisition Corporation, a publicly-traded Special Purpose Acquisition Company (SPAC), announced a merger. This means PlayStudios, which was formerly a privately owned company, is now available in public markets. Also, SPACs are referred to as blank cheque companies in many cases.
They do not have goods or services of their own, but they have huge capital used to fund/acquire private companies. Private companies entering the public markets through SPACs became popular in 2020 when other popular gaming companies like DraftKings, Rush Street Interactive and Genius Sports Group went public through different SPACs.
Acies Acquisition Corp.
Acies Acquisition Corp, the acquiring SPAC, is headed by Chairman Jim Murren, the former chairman and CEO of MGM Resorts International. The corporation is traded on the NASDAQ as the ACAC, a Class A ordinary share. In October 2020, Acies SEC filing revealed that it was seeking an initial public offering of $200 million.
In the SEC filing, Acies stated that it was “focused on identifying a business combination target within the live, location-based and mobile experiential entertainment industries. Specific sectors that we will target span live events, family entertainment, casino gaming, destination hospitality, sports, sports betting and iGaming, and social and casual mobile games.”
PlayStudios
PlayStudios, the target company which meets these requirements, is headed by its Founder, Chairman, and Chief Executive Officer, Andrew Pascal. After the merger, Andrew Pascal will continue his role at the company and a key figure in Acies Acquisition Corp. Over the years, PlayStudios has developed a reputation as a developer of free-to-play games. It was described recently as “an award-winning developer of free-to-play casual games for mobile and social platforms that offer real-world rewards to loyal players” in a news release.
PlayStudios portfolio consists of top-ranked games with amazing designs. They have a large following due to numerous playAwards that loyal players get. The same news release stated that “over 80 partners and 275 entertainment, retail, travel, leisure, and gaming brands,” contribute to the rewards that players get. Over 10 million rewards with a retail value of about $500 million have been purchased by users using their loyalty points. The app was awarded as a Top Developer by App Annie, the gaming industry’s best in-app analytics and app performance data.
In a public statement by Andrew Pascal, “From our inception, we set out to create wonderfully compelling games that were free-to-play and offered real-world rewards. We’ve now demonstrated the positive, long-term impact of this value proposition with our current portfolio of apps, and we’re poised to carry that success into new products and new game genres. Becoming a public company and securing the resources and support of key institutional investors will enable us to accelerate our growth as we launch new products, pursue new acquisition opportunities, and scale up our unique PLAYAWARDS loyalty program.”
Acies Chairman, Jim Murren said, “Within today’s vast and growing games market, PLAYSTUDIOS is unique in offering their audience the opportunity to play for fun and earn for real. They know how to make engaging and enduring games and stand apart in having harnessed the power of a robust and full-featured loyalty program. “
He went on to lay out plans for the company’s future; “the focus is now to take the PLAYSTUDIOS platform and super-charge its growth. We have abundant initiatives, including targeted, strategic acquisitions; an expansion of the rewards program into new categories such as sports entertainment; and the exploration of opening the PLAYAWARDS platform under a loyalty-as-a-service model. We look forward to leveraging Acies’ M&A knowledge and broad relationships for the benefit of PLAYSTUDIOS and its shareholders.”
Valuation
The SPAC transaction, supported by Jim Murren’s former employer, values PlayStudios at $1.1 billion; that is 2.5x projected 2022 revenue of $435 million or 12.3x projected 2022 pro forma Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization EBITDA of $90 million. Therefore, PlayStudios will have ACAC stock worth 89.1 million shares and up to $150 million in cash.
PlayStudios and Acies are backed by institutional investors’ funds and accounts managed by BlackRock, ClearBridge Investments, Neuberger Berman Funds, and MGM Resorts International. These investors are top participants in the $250 million private investment in public equity (PIPE) financing round at $10 per Acies share towards the transaction closing.
A statement regarding the transaction stated that, After giving effect to the transaction, the company is expected to have approximately $290 million of cash and a public equity currency to accelerate PLAYSTUDIOS’ growth initiatives, including substantially expanding product development and acquisitions of other gaming and related companies.
Upon the closing of the transaction, and assuming none of Acies public stockholders elect to redeem their shares, existing PLAYSTUDIOS shareholders are expected to own 64%, the Acies sponsors 3%, PIPE participants 18%, and public stockholders 15%; all of the combined company.”
At the end of the transaction, the combined company will be named PLAYSTUDIOS and listed on NASDAQ under the new ticker symbol “MYPS.” The board of directors of the concerned parties has approved the transaction, and it is expected to be finalized at the end of the second quarter. Also, the stockholders at Acies will have to approve the transaction, and other closing conditions could affect the transaction.
More SPAC Mergers
The transaction between Acies and PlayStudios is not the only ongoing merger; other keepers are in the works. Announced around the same period is the merger between Tilman Fertitta’s Fertitta Entertainment confirmed and FAST Acquisition (traded on the NYSE as FST), with the operator of five Golden Nugget casinos and the Landry’s restaurant consortium valued at $6.6 billion. Also, this merger is expected to close at the end of the second quarter.
Conclusion
This is exciting news for the industry, with PlayStudios taking the lead as the first mobile game company offering real-life rewards to go public. This will pave way for more mergers and acquisitions, and overall growth for the casino industry, as well as its individual players.
